Economy: Retail Sales - Reality Check From The Consumer Front

(Drivebycuriosity) - Finally! The US consumers are responding to the falling gas prices. This morning we learned that US retail sales grew 0.2% in January. The December growth rate was revised to plus 0.2% as well. Ex-gasoline the retail sales advanced 0.4% (revenues at gasoline stations fell by 3.1% in the month thanks to the dropping gas prices). Retail and Food service sales ex-gasoline increased by 4.5% from January 2015 (calculate). The January numbers are encouraging because the US North East - including New York City - was covered by a severe snow storm for a whole weekend in January.

I had expected this improvement (driveby).  I had frequently explained that falling gas prices will encourage the consumers to spend more money for other goods & services (here here  here ). The average gas price at US pumps is now about 15% down year-to-date and gas costs around 30% less since last October. It seems that the positive impulse from falling oil prices on the financial markets (futures for Crude & Brent Crude) is working through the system and begins to foster the economy.

Consumers are also benefitting from a solid labor market. Last year the US economy created 2.67 million new jobs and the growth rate of the hourly wages accelerated to plus 0.5% in January. Wages climbed 2.5% in the recent 12 months.

I believe that the US retail sales will gain more speed in the coming months. Gas prices are now about 25% below last year at the same time and weekly jobless claims fell to 268,000,  a sign that the labor market is solid in spite of all the gloom & doom on the financial markets.

Today´s numbers are a reality check: They show that cheap oil is indeed fostering the economy. They also show that the US is far away from a recession.